Munich Personal RePEc Archive

Income Distribution and Macroeconomics

Galor, Oded and Zeira, Joseph (1988): Income Distribution and Macroeconomics.

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Abstract

This paper analyzes the role of income distribution in macroeconomic analysis. The study demonstrates that the long-run equilibrium depends on the initial distribution of income. In accordance with empirical evidence concerning the correlation between income distribution and output, an economy that is characterized by a relatively equal distribution of wealth is likely to be wealthier in the long run. The study may, therefore, provide an additional explanation for the persistent differences in per-capita output across countries. Furthermore, the paper may shed light on cross-countries differences macroeconomic adjustment to aggregate shocks.

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